Abstract

Economists tend to favor the free �ow of capital across national borders,
because it allows capital to seek out the highest rate of return. Unrestricted
capital �ows may also o¤er several advantages, as noted by Feldstein (2000).
First, international �ows reduce the risk faced by owners of capital by al-
lowing them to diversify their lending and investment. Second, the global
integration of capital markets can contribute to the spread of best practices
in corporate governance, accounting standards, and legal traditions. Third,
the global mobility of capital limits the ability of governments to pursue bad
policies.
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